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The future of shopping

Few industries can match retailing for cut-throat competition. Jostling for the attention of consumers, Tesco, Wal-Mart and other giant retailers are working hard to fine-tune their store formats.

Now hi-tech emerges as a tool to build market share. BBC News Online visited the "Future Store" in Rheinberg, Germany, set up by the world's fifth-largest retail group, Metro.

The intelligent scale doesn't like our bunch of bananas.

When we had put tomatoes on the scale, its digital camera took just a split second to recognise the produce, weigh it and print a bar-coded price tag.

No wait at a checkout to have them weighed. No need to find "tomatoes" on a 50-button display.

But now the scale is baffled, and offers four choices: Are we weighing bananas, chicory salad, long beans or avocados?

Touching the banana logo on the screen solves the slip-up. "The bunch of bananas was probably too large for the camera," says an apologetic shop assistant.

Welcome to Metro's Future Store.

New and old

At first glance the supermarket looks disappointingly normal.

Yes, to German shoppers the layout may be revolutionary, with wide "freshness aisles" right at the entrance, offering a vast and pleasantly displayed array of fresh fish, meats, vegetables, and the mouth-watering smell of freshly baked bread and donuts.

Nothing new here for many French and UK shoppers.

The real revolution, though, lies with nifty machines like the Intelligent Scales using IBM's Veggie Vision software.

The machines, so the claim goes, can identify most produce by sight, regardless of whether it is packed in a plastic bag or not.

Marketing the easy way

The good people of Rheinberg a town of 30,000 in the west of Germany are willing participants in this hi-tech experiment in retailing.

Not sure what to buy? In key sections - multimedia, baby care, hair colours, wine, meat, and fruit and vegetables - touchscreen terminals give in-depth information.

How a particular wine tastes, which food to have with it, and a smattering of the wine region's history - in colour, interactive, and on demand as a print-out.

Learn how to cook asparagus and skin tomatoes. Get recipes for the meat and veg available and in season (courtesy of Nestle, whose products just happen to crop up in some of the recipes).

Above the aisles, large flat screens show still pictures and videos of special offers and promotions.

"Customers buy more when we have two screens next to each other showing the same product," says Metro's Holger Schneidewindt.

A quick scan of a product barcode, a few taps on a handheld computer, and the wireless network changes the display on the large flat screen above a shelf groaning with bottles of vodka and schnapps.

For managers of the 4,000 square metre store, it is marketing the easy way.

Don't scream for ice cream

Personal Shopping Assistants (PSA) are the clincher, though - small Wincor Nixdorf tablet computers clipped to shopping trolleys and activated with a loyalty card.

Want some ice cream but don't know where to find it? Type "ice cream" on the touch screen and you are directed to the correct aisle - floor plan included.

Regular purchases show up on a favourites list, with price and location. Special offers are flagged up as you move from section to section.

Write your shopping list online - at home or work - and soon it will be automatically downloaded to the PSA.

The integrated scanner gives you both a running total of your shopping and fast-track treatment at the check-out.

Smart logistics

The shop's shelves sport 30,000 wireless electronic price labels that can be changed at the push of a button.

Smart self-scan check-outs, meanwhile, tackle fraud by comparing the weight of your shopping bag with the items you scanned and prevent underage drinking by prompting staff to check out customers scanning alcoholic products.

The Future Store's biggest potential, though, is its use of RFID tags, a kind of "talking barcodes".

With the help of software from business process expert SAP, Metro now knows in detail how supplies move from the Essen distribution centre on to trucks, into the Rheinberg store room, and on to the shop floor.

The result: the inventory is always up-to-date, shelves are rarely empty, and losses are down.

At its most revolutionary, smart shelves using RFID - currently tested on Gilette razor blades, Pantene shampoo and Philadelphia cream cheese - alert staff when the shop's shelves are getting empty or cheese packs are past their sell-by date.

Are Rheinbergers geeks?

One year into the experiment, the people of Rheinberg have taken to the store with gusto.

"Customers come to the store more frequently, store loyalty is up and sales are up 30%," says Metro spokesman Albrecht von Truchsess.

To a large part that is due to the store's new "fresh and easy" format.

But more than 70% of customers have used the various technologies at least once, and a hard core of regular users (21% for PSAs, 53% for the scales) is growing strongly.

And it is the over-60s, not just the geeks of this rural area, who are among the keenest to use the new technology.

Looking past the bottom line

But does the Future Store make a profit?

Not in the traditional sense. Ultimately, it is just a large laboratory, using customised bleeding-edge technology.

"One can't talk about return on investment for such a store," says Metro's Mr von Truchsess.

And anyway, for Metro's 45 technology partners, this is a giant "Bring Your Own Technology" party, where each partner's costs are neither disclosed nor added up.

For Metro, meanwhile, it is an opportunity to find out whether better service and a streamlined supply chain can help it compete with Germany's ultra-cheap grocery discounters like Lidl and Aldi.

But it is also a way to identify potential trouble, for example to see whether radio interference can trip over large RFID systems.

There is just one problem. Surveys suggest that some customers dazzled by the snazzy technology think prices must be higher as well.

Not so, says Metro's Mr von Truchsess.

But he admits: "There will always be certain areas where customers will not accept a high-technology store".

Posted by thinkum at May 18, 2004 02:02 PM